Take an inventory, listen to our summer story

For the past several months, if you were having a hard time finding furniture, appliances or even a car, you weren’t alone.

A combination of increased consumer demand and supply-chain issues amid the COVID-19 pandemic have led to shortages in various categories of consumer goods.

As was discussed recently on our Eh Sayers podcast episode “Dude, Where’s My Semiconductor?,” there are a lot of factors contributing to shortages—for example, shipping containers have spent more than twice as long at sea, and the cost of using those containers has risen quite dramatically.

There are also delays in getting those containers offloaded, dwell time in West Coast ports nearly doubled from 2.9 days in November 2021 to 5.7 days in April, while those in East Coast ports ticked up from 4.6 to 5.3 days over the same period.

There is often no direct correlation between wholesale inventory numbers and retail sales numbers for the same month, given that wholesale sales do not always go directly to retailers. Often, goods will go to another business or institution, such as an exporter, a hospital, a school or another wholesaler—and there might be a lag before the repercussions are felt by all the stakeholders of the supply chain.

However, a look at the latest inventory and sales numbers can give us an idea of where supply and demand are at—whether a product is made entirely in Canada with parts sourced from abroad or the finished product itself is imported.

Wholesale sales rose 1.6% in May 2022 to $81.1 billion, the eighth increase in the past 10 months. There have been positive signs of an increasing number of certain items in wholesale inventories, whose values rose 2.5% to $115.2 billion in the same month.

These days, you might have better luck buying items for your home. Wholesale inventories for home entertainment equipment and household appliances stood at close to $1.4 billion in May 2022, an increase of nearly 45% since the previous year, and there was $962 million in wholesale sales recorded.

Meanwhile, retail sales for electronics and appliances stores were nearly $1.4 billion in the same month, up by 5.6% from the previous year.

There was a 34% year-over-year increase in inventory value of home furnishings to nearly $1.9 billion in May 2022, and $740 million worth was sold to other businesses and retailers.

So, while there might be enough sectional sofas for everyone, get there early! Furniture and home furnishing stores recorded over $1.9 billion in retail sales in May 2022, up by about a quarter (25.2%) from May 2021.

Need to keep cool or fix those leaks? Electrical, plumbing, heating and air conditioning equipment, and supplies merchant wholesalers had close to $6.5 billion of product in stock in May 2022, up over 44% from the previous year. Close to $3.8 billion of those products were sold to retailers and other businesses busy keeping up with customer demand.

Want to do some summer yardwork? It might be a bit easier to find some farm, lawn and garden machinery and equipment. Inventory value in May 2022 was nearly $6.3 billion, up by close to 14% from the previous year.

About $2.3 billion of product was sold to other businesses and retailers in the same month, while building material, garden equipment and supplies dealers recorded over $4.2 billion in retail sales, up by nearly 6% year-over-year.

Looking ahead

In the second quarter of 2022, about three-quarters (74.0%) of businesses in the wholesale trade industry directly sourced their inputs, products or supplies within Canada, below businesses in manufacturing (87.2%), but above those in transportation and warehousing (69.0%).

In the same period, over one quarter (26.4%) of businesses that expected to face supply chain challenges in the short term reported that they plan to substitute inputs, products or supplies with alternate inputs, products or supplies over the next 12 months.

Over half (55.2%) expect inflation to be a bigger issue when discussing wage increases with employees over the coming year amid labour shortages in many sectors.

One last key figure to take stock in is the inventory to sales ratio, a measure of time (in months) required to exhaust inventories if sales remained at current levels went up from 1.37 in March 2022 to 1.42 in May.